Practice Area:
Banking & Finance

Banking & Finance in India

A PriceWaterhouseCoopers report indicates that India could
rise from today's relatively low levels to emerge as the third
largest domestic banking market in the world by 2040 - and could
ultimately grow faster than China.

State-owned financial institutions dominate the Indian
banking industry and capital markets. The liberalization of
banking and insurance over the past decade has led to a
transformation, with private banks (including many foreign
institutions) entering the state-dominated sector and taking an
ever-rising share of business.

Bank performance has also been helped by rising consumer
incomes, and this has led to a steady increase in lending
levels. However, the global liquidity crisis is now affecting
India and leading to sharp reductions in lending. India's
relatively tight regulation of the country's banking sector,
along with its focus on basic products and services, has
afforded it a certain degree of protection.

India has more people living in poverty than any other country,
and small-scale agriculture remains an important part of the
economy. As a result, demand for sophisticated financial
services products is not widespread. However, a rapid increase
in demand for financial services products in recent years has
reflected rising incomes and increasing urbanization of the
population.

Trends: Prepaid Debit Cards & Mobile Banking

There has been a rising need in urban, youth and related
upper middle class segments for prepaid debit cards. This is
fueled by increased consumer retail spending.
We have also seen much traction in Mobile Banking services as
India embarks on increased rural penetration, as evidenced by
the new Central Government Budget.